'Events are now spinning out of control' in Greece

The Greek people voted "no" on Sunday, much to the government's surprise.
AP Photo/Petros Giannakouris
Ambrose Evans-Pritchard at The Telegraph has just dropped a bomb on the situation in Greece.

Writing in The Telegraph on Tuesday, Evans-Pritchard reports that the Greek referendum unexpectedly called Friday and carried out Sunday was held in anticipation that Greece's controlling Syriza government would lose.

That's right: Greek Prime Minister Alexis Tsipras called a referendum on the latest bailout terms offered to Greece, campaigned that the Greek voters should vote "no" and reject these measures, and expected the vote would still be a "yes."

But as Evans-Pritchard outlines in his bombshell report Tuesday, everything is falling apart for Syriza, Tsipras, and the entire country of Greece.

"What should have been a celebration on Sunday night turned into a wake," Evans-Pritchard writes.

Greek Prime Minister Alexis Tsipras.
REUTERS/Philippe Wojazer
"Mr Tsipras was depressed, dissecting all the errors that Syriza has made since taking power in January, talking into the early hours. The prime minister was reportedly told that the time had come to choose, either he should seize on the momentum of the 61pc landslide vote, and take the fight to the Eurogroup, or yield to the creditor demands — and give up the volatile [Greek Finance Minister Yanis] Varoufakis in the process as a token of good faith."

Varoufakis resigned in the middle of the night Sunday, and news broke that Tsipras and Varoufakis' replacement — Euclid Tsakalotos— would head to Brussels for an emergency meeting on Tuesday.

A report from Reuters on Tuesday indicated that Greece's banks had only two days of cash left. And this after ATM withdrawals had been limited to 60 euros per day for over a week.

On Monday, the European Central Bank declined to increase its emergency lending assistance to Greece, meaning that Greek banks will not have access to any more cash from the ECB. Greece last week, and again Monday, had requested an increase in the ELA.

As Evans-Pritchard reports, "Syriza has been in utter disarray for 36 hours ... Events are now spinning out of control. The banks remain shut. The ECB has maintained its liquidity freeze, and through its inaction is asphyxiating the banking system."

People lined up to withdraw cash from an ATM outside a National Bank branch in Iraklio on the island of Crete, Greece, on June 28.
REUTERS/Stefanos Rapanis
Reports on Monday also indicated that Greek banks would be closed at least through Wednesday, but now it looks as if the bigger question is how the banks will reopen at all.

When results of Greece's referendum came in, Wall Street banks were nearly unanimous in saying that the most likely scenario for Greece was an exit, or "Grexit," from the euro.

According to Evans-Pritchard's report, Tsipras rejected a "triple plan" devised ahead of the referendum that aimed to avoid a Grexit by firing the Bank of Greece governor, seizing all cash stowed away in various central bank branches, and issuing a parallel currency with IOUs denominated in euros.

Something like this plan, however, is what Tsipras may have to do anyway, according to Evans-Pritchard, as Greece has quickly run out of options.

The latest headlines out of Europe indicate that all 28 European Union members — not just the 19 members of the eurozone — will convene for a summit this Sunday.

Italian Prime Minister Matteo Renzi told Reuters on Tuesday that he was "not pessimistic" about this meeting, believing that a deal could be reached and this would be the final meeting on the issue.

Renzi added, however, that it was up to Greece to come up with a plan.